Hotels in Funchal Old Town and Why They’re Worth Discovering
When planning a trip to Madeira Island, one of the most charming and historically rich areas to stay is the Old Town of Funchal. Known locally as Zona Velha, this district blends centuries-old architecture with lively restaurants, art-filled streets, and easy access to the city’s main attractions. Staying here means you’re not just visiting Madeira, you’re immersing yourself in its culture, history, and vibrant daily life.
If you’re searching for the best hotels in Funchal Old Town, we’ve curated a list of five unique four-star properties that combine style, comfort, and unbeatable location. Whether you’re travelling as a couple, with family, among friends, or solo, these hotels promise an unforgettable stay.
And here’s a tip: combining your stay with a rental car from 7M Rent a Car gives you the freedom to explore Madeira far beyond the Old Town, so you can enjoy the city’s charm and the island’s breathtaking natural wonders with complete ease.
5. Hotel Albergaria Dias
Location: Rua Bela São Tiago nº44 B, 9060-400 Funchal
Category: 4 stars
Hotel Albergaria Dias is a charming, family-run property that feels like a home away from home. Known for its warm hospitality and personalised service, this hotel offers a more intimate stay compared to larger resorts.
Its location in the eastern part of the Old Town means you’re just a short walk from the Forte de São Tiago and the picturesque promenade. The hotel features comfortable rooms, a relaxing pool area, and a delightful breakfast service that often includes homemade treats.
This is a great option for travellers who value a personal touch and a relaxed atmosphere while still being close to Funchal’s main attractions.
4. Sé Boutique Hotel
Location: Travessa do Cabido nº 17, São Martinho, 9000-715 Funchal
Category: 4 stars
If you want to combine cultural immersion with boutique luxury, Sé Boutique Hotel should be on your radar. Situated just steps from Funchal’s iconic Cathedral (Sé), this hotel celebrates art and creativity in every corner. Each floor is inspired by a different aspect of Madeira’s culture, from local flowers to historical tiles.
The rooftop bar offers 360-degree views of the city, making it the perfect spot for a sunset cocktail. The rooms are modern, comfortable, and filled with artistic details that give the property a unique personality.
This hotel is ideal for travellers who want to be in the cultural heart of the city, with easy access to museums, galleries, and the buzzing food scene of the Old Town.
3. Castanheiro Boutique Hotel
Location: Rua do Castanheiro nº31, São Martinho, 9000-081 Funchal
Category: 4 stars
Castanheiro Boutique Hotel brings a modern and artistic flair to the hotels in Funchal Old Town scene. Set within a cluster of restored historic buildings, the hotel is a design lover’s dream, with stylish interiors that blend contemporary touches with original architectural elements.
The rooftop infinity pool is one of its standout features, offering breathtaking views of Funchal’s skyline and the surrounding mountains. Guests can also enjoy a small spa, a cosy library lounge, and a vibrant restaurant serving seasonal dishes.
Its location is perfect for those who want to explore both the Old Town and the newer parts of Funchal. Within minutes, you can walk to museums, cafes, and the marina, making it a fantastic base for urban explorers.
2. Hotel Quinta Bela São Tiago
Location: Rua Bela São Tiago nº70, 9060-400 Funchal
Category: 4 stars
For those who love history, elegance, and a peaceful atmosphere, Hotel Quinta Bela São Tiago is an exceptional choice. Originally built as a private manor house in the 19th century, this hotel has been beautifully restored to preserve its original charm while offering modern comforts.
The property boasts lush gardens, a swimming pool with views over Funchal’s bay, and a refined restaurant serving gourmet cuisine. The rooms are tastefully decorated, many with balconies offering stunning ocean vistas.
Located in the eastern part of the Old Town, it’s just a short walk to the lively Rua de Santa Maria, where you’ll find art-covered doors, traditional taverns, and contemporary dining spots. This is a hotel for travellers who want a quiet retreat without being far from the action.
1. Hotel PortoBay Santa Maria
Location: Avenida do Mar e das Comunidades Madeirenses nº50, 9060-190 Funchal
Category: 4 stars
Hotel PortoBay Santa Maria is one of the crown jewels among the hotels in Funchal Old Town. Perfectly positioned on the seafront promenade, it offers panoramic views of the Atlantic Ocean and is only a short stroll from the historical streets of the Old Town.
This elegant hotel blends resort-style amenities with urban convenience. Guests can enjoy spacious rooms with private balconies, an inviting pool area overlooking the ocean, and a choice of restaurants offering both international and Madeiran cuisine. Its location makes it ideal for those who want to be within walking distance of cultural landmarks like the Mercado dos Lavradores and the Madeira Story Centre.
With direct ocean access and the soothing sound of waves as your backdrop, this hotel is perfect for travellers seeking both relaxation and proximity to the city’s vibrant energy.
Why You Should Experience One of These Hotels and Visit Madeira Island
Choosing one of these hotels in Funchal Old Town isn’t just about having a place to sleep; it’s about experiencing Madeira’s soul. Here, centuries-old streets are alive with music, art, and the aroma of freshly grilled espetada. You can wander from your hotel to discover colourful street art, taste Madeira wine in historic taverns, and watch fishermen bring in the day’s catch.
Staying in the Old Town places you right in the middle of it all. And yet, Madeira is so much more than its capital. From the rugged cliffs of Cabo Girão to the natural swimming pools of Porto Moniz, the island offers countless adventures beyond Funchal’s cobblestone lanes.
Why Renting a Car with 7M Rent a Car Makes Island Travel Effortless
While staying in the Old Town gives you rich cultural experiences, having a rental car lets you combine the best of both worlds, city life and island exploration. With 7M Rent a Car, you can:
- Pick up your vehicle directly from the airport or near your hotel
- Choose from a wide range of modern, comfortable cars
- Explore remote beaches, mountain trails, and traditional villages at your own pace
- Save time compared to public transport schedules
- Travel with flexibility, whether you’re with family, friends, or on a romantic getaway
Madeira’s beauty lies in its variety, and the best way to see it all is on your own terms.
From oceanfront elegance to boutique charm, these five hotels in Funchal Old Town offer unique experiences that cater to different travel styles. Pair your stay with a rental car from 7M Rent a Car, and you’ll have the freedom to explore every corner of Madeira, creating memories that will last a lifetime.
Discover more about How to Rent a Car in Madeira: 10 Essential Tips in our guide.
